NORWALK, CONN. (Nov. 30, 3:45 p.m. ET) — It's been a good century for H. Muehlstein & Co. Inc.
During the course of the last 100 years, Muehlstein has moved from the scrap rubber market into supplying plastics processors with the resins they need. Along the way, the Norwalk-based firm has had a few ownership changes, trained generations of salespeople and ran a vital scrap rubber reclamation effort for the U.S. government during World War II.
Today, Muehlstein employs almost 200 and distributes about 2.5 billion pounds of plastic resin annually throughout the globe, working with more than 60 supplier partners. Although the firm does not disclose annual sales data, industry watchers estimate that Muehlstein's annual sales are more than $1 billion.
New York for starters
All of this is probably a lot more than Herman Muehlstein envisioned when he opened for business in New York in 1911. Muehlstein, an immigrant from what was then Austria-Hungary, had learned the scrap rubber trade in Akron, Ohio, and in Chicago before moving to the Big Apple. The 32-year-old Muehlstein used $40,000 of his own money to start the firm.
The company grew steadily, with Herman being joined by his brothers Julius and Charles. Herman was described as “an inscrutable man whose shell was hard to penetrate” in A Family Called Muehlstein, a company history that was published in 2005. But he had the ability to recognize managerial and sales talent in others. Julius was the most outgoing of the three brothers, and was described in the book as “a salesman's salesman.” Julius' son, Herbert, also would have a long career as a salesman with the firm.
Muehlstein — the company — weathered the Great Depression well, posting the only loss of its 100 year-history in 1932. The firm struggled its way through the 1930s, but got a boost during World War II when it was selected by the U.S. government to lead the country's scrap rubber recovery program, which was important because global supplies of rubber were constricted by the war.
Jump to plastics
Mulehlstein's big move into plastics came after the war. Julius Muehlstein is credited with making the firms' first plastics deal, acquiring scrap butyrate that a manufacturer in Indiana was using as a rubber replacement, selling it to a company in Boston.
By the late 1940s, this interest in plastics had grown into a relationship between Muehlstein and Dow Chemical Co. under which Muehlstein would sell Dow's non-prime polyethylene. The arrangement became known as the “Dow Off-Grade Deal.”
Midland, Mich.-based Dow “had a lot of what we called ‘end runs,' ” Herbert Muehlstein later recalled. “Three thousand [pounds] of this, 5,000 of that … the combined volume that came out was enormous.”
Muehlstein expanded further into plastics in the early 1950s when it agreed to market prime PE from a plant operated by Sinclair-Koppers Co. in Kobuta, Pa., and prime polystyrene from a plant operated by Foster Grant in Leominster, Mass.
Muehlstein executive Al Chester is credited with leading the firm's early plastics efforts. He headed the first separate plastics department within Muehlstein and would become the firm's president after Herman Muehlstein's death in 1962.
“Al Chester and several senior managers soon recognized that plastics was becoming a significant and very promising business,” according to A Family Called Muehlstein. “Once that epiphany occurred, changes began quickly.”
“Fueled by the guaranteed supply of off-grade polyethylene from Dow, spot buys from other plastics producers and scrap purchases from plastics processors, this new group's effort soon flourished. Muehlstein had become a dominant reseller of plastic polymers.”
One of Muehlstein's important early customers was Tupperware, maker of iconic plastic packaging. “Sinclair-Koppers' whitest, snowiest polyethylene that no one wanted became the frostiest look ever seen for Tupperware,” according to A Family Called Muehlstein.
The Leominster market also played a key early role for Muehlstein, as it did for many other plastics suppliers. “We moved millions of pounds up there in Leominster,” longtime executive Norman Feintuck recalled in the book.
“I always felt that if you could sell in Leominster, you could sell anywhere, because the city was such a competitive hotbed.
“You'd walk into a plastics company and there would be a dozen salesmen there — all with the same material, Talk about a tough sell!”
Muehlstein also was an early player in international markets, even well before its entry into plastics. The firm was sourcing scrap rubber in Europe by the early 1920s and opened an office in Germany in 1922. Offices in other European locations soon followed, establishing Muehlstein throughout the continent by 1929.
A big move with Dow
In 1962, Muehlstein entered into a full-fledged distribution agreement with Dow. Two years later, Dow bought a 25 percent stake in Muehlstein, which it expanded to a 37.5 percent stake in 1967.
“The Dow deal was so big — even after the deals with Foster Grant and Sinclair-Koppers — because of the reputation [Dow] had,” said Damian Mullin, Muehlstein's sales director and the firm's unofficial historian.
1962 also was noteworthy for the hiring of Kevin Donohue, who would remain with the firm for most of the next 45 years, including a 12-year stint as its president. In his first year at Muehlstein, Donohue had a brief encounter with Herman Muehlstein.
“I started in New York City as a sales trainee, and was at my desk putting together samples for our sales force,” Donohue recalled in a recent interview. “This older man walked by and asked me what I was doing. I told him what I was doing and he said to keep doing it.
“I didn't even know who he was. A little bit later I asked someone and they said, ‘That's Mr. Muehlstein!' ”
The expansion into plastics continued throughout the 1960s. Company executive Art Ferguson later recalled that “in the '60s and later, the plastic manufacturers expanded their production significantly.”
“That was an opportunity for us. We just bought and bought and bought and made the sales force bigger.”
The company's exiting of the crude-rubber market in 1964 was symbolic of the emphasis on plastics. Growth also led the firm to move from its longtime New York office to one in Greenwich, Conn., in 1970. Muehlstein would be based in Greenwich until 1989, when it moved to its current headquarters in Norwalk, Conn.
The firm's ongoing success and expansion into global markets eventually caught the eye of one of its suppliers, Mobil Corp., which was looking for a way to market resin from a plant it was building in Saudi Arabia. New York-based Mobil bought all of Muehlstein in 1980, in a deal that required Dow to divest its ownership stake.
“Mobil purchased Muehlstein to have an instant sales and marketing entity,” Mullin said. “But Muehlstein needed to keep its distance [from Mobil] because they wanted to keep doing business with other producers.”
While owned by Mobil, Muehlstein would expand into Asian markets. In the late 1980s, Muehlstein opened offices in Hong Kong and Singapore. In the early 1990s, Muehlstein chose the name Pegasus Polymers for its operations in Asia and Europe. The firm later expanded into China, opening a Shanghai office in 2002.
Muehlstein would remain part of Mobil until 1996, when Mobil opted to divest the business and other non-core assets. Muehlstein employees bought the firm back from Mobil.
The buyback was proposed by Donohue, who had become the firm's president in 1993 after a three-year stint with other Mobil businesses. He said employee ownership made Muehlstein a stronger company in the long run.
“Most [Muehlstein] employees owned shares in the company, and that gave you a stake and a sense of participation,” he said. “There was very little politics, in that sense. You wanted the young guys to succeed. There was very little bureaucracy.”
Then came Ravago
Muehlstein then functioned as an independent company until 2006, when Ravago SA — a major resin distribution, recycling and compounding firm based in Brussels — purchased the company from its employee owners.
“When Ravago bought the business, it was a perfect fit,” said Fernando Montenegro, who has been Muehlstein's president since 2009, when he took over for longtime veteran Mark Lux. “One was a complement of the other.”
Throughout its periods of independence and partnerships — with Dow, Mobil and now Ravago — Muehlstein has managed to maintain a separate identity. That hasn't always been easy, but it's been crucial to the firm's success, according to current and former executives.
“It's the culture of the company that preserves it,” Donohue said. “The company always felt it had to perpetuate itself by hiring good people. Then we could train them and make the Muehlstein culture.”
Montenegro credited Donohue and former executives like Ferguson and Feintuck with preserving the Muehlstein name after the sale to Mobil in 1980.
“It's because of those executives that we kept our identity,” he said. “They got support [from Mobil] to grow the business that Muehlstein had and we were able to keep our U.S. presence.”
“There's no question that what's set Muehlstein apart comes down to the culture of the company that began with Herman Muehlstein,” Mullin added. “It's a remarkable achievement for a company to foster an identity over five generations.”
Sales lead the way
Muehlstein's intense focus on sales — and the time it puts into developing young salespeople — also has set the company apart.
“We've always called it ‘belly-to-belly,' Montenegro said. “Know your customers' strengths and weaknesses and families. Form a close bond with suppliers. Make strategic global alliances.”
“We definitely recognized that the business is not about plastics only, but about people,” he added. “We don't make anything. Our assets are people. We try to identify people with passion for what they do, then we invest in those people. Even those that leave us have focus, intensity, discipline and passion in any business they go into.”
Typically, a Muehlstein salesperson would spend a year on internal sales, working with established sales reps. They'd then be mentored by one of those reps for a while before going on their own.
Even in the early days of the company, Herman Muehlstein was known for spotting talent among the firm's office workers and transitioning them into sales roles.
“The people in sales were the ones who brought in income,” Donohue said. “We'd spend two to three years in training for the position — with inside sales and working with the sales staff. Individual mangers would have product responsibility, so when you went on the road, you'd already know how transactions are put together.”
Mullin added that, at Muehlstein, “there's been a steadfast devotion to customers and building relationships with customers.”
“That's a big part of our culture, and we foster it,” Mullin said.
“It doesn't mean lunches and dinners and golf. We learn our customers' business and find ways for them to be successful.
“Most of our sales people start here under age 30. We build sellers rather than buy them from the competition. They stay longer and are more successful longer term.”
Muehlstein executive Dave Skoczen had a unique vantage point on Muehlstein culture, joining the firm in 1998 as a rare outside hire who didn't come up through its sales ranks. Skoczen was brought on to run Channel Polymers, a Muehlstein unit aimed at selling small to midsized lots of prime, branded resin.
During an 18-year stint at Ashland Distribution, Skoczen “had heard that Muehlstein was very good — a leader at what they did.”
“When I came on board, I found that to be true,” Skoczen said in a recent interview. Muehlstein “took excess quantities [of resin] and sold them without disrupting the market. They weren't afraid to take risks and they were good at moving volume. They put the focus back on customers.”
Skoczen — who now serves as a Muehlstein vice president and general manager of Muehlstein North America — added that he also was impressed with the hands-off treatment he received, especially since he came from an outside firm.
Muehlstein officials “couldn't have given me more latitude and trust,” he said. “I hired my own people and used my own metrics.”
“In my first week, I sat down with Kevin Donohue and asked how he wanted me to report. He said, ‘If I want to know, I'll come to your office and have coffee and we'll talk about it.' I thought he was kidding, but he was serious.”
And in spite of its close dealings with Dow and other industry players, Muehlstein officials have remained adamant in their conviction to not become a material producer themselves. The firm has been involved in recycling and compounding, but never in base resin production.
“At the end of the day, we couldn't become a [resin] producer and expect to make a living off of other producers,” Donohue said. “That would have killed the strength of the business.”
“We've had reprocessing and calendering and carbon rubber [operations] at various points in time, but we always thought that getting into [resin] production would be a mistake,” Mullin said. “We'd immediately lose support from other producers in terms of image and the type of business we were.”
In Ravago, Muehlstein officials said they believe the firm has found a kindred spirit in the plastics industry.
“Muehlstein has a closer affinity to Ravago than it did with Mobil,” Mullin explained. “Both [Muehlstein and Ravago] were in scrap and have origins in recycling. The families are very similar.
“We have a great affinity for each other because we think alike. It's always been drilled into heads that this business is not about pounds, plastic, warehouses or trucks — it's people.”
Ravago “is very much like our company,” Donohue added. “We can communicate and still maintain the Muehlstein culture. It's been a very smooth transition.”
The Muehlstein integration with Ravago has reminded Skoczen of his own initial experience.
“The Muehlstein culture stayed even after Ravago came in,” he said. “They found a way to get it done.
“Usually, acquiring companies integrate their own people into new acquisitions to see what they paid for,” he said. “But Ravago didn't send anybody over. They had complete trust in the Muehlstein management and team. They said they bought us because we were a winning company and to keep doing what we were doing.”
Development pays off
The experience of Montenegro — the firm's current president — also emphasizes the role that focusing on employee development has played at Muehlstein. In the early 1980s, Muehlstein made its move into Latin America by hiring experienced salespeople in Peru, Brazil, Mexico and nearby countries. Montenegro started working for Muehlstein in his native Peru in 1983.
After a couple of years, he transferred within the firm to Puerto Rico, and four years later found himself at Muehlstein's Connecticut headquarters.
“I was a chemical engineer, but my professors told me, ‘Fernando, you're going to be a salesman, you're not going to be an engineer,' ” he said. “But when I came to America, I didn't even speak English. I was just trying to get by.
“The company put a lot of faith in me. I can't come up with words to express the honor and the way I feel to be president of Muehlstein. I might have dreamed about it, but I never thought it could happen.”
In his almost 30 years with Muehlstein, Montenegro has formed an idea of what's allowed the firm to survive and thrive: “Throughout our history, there have been many changes in the industry. We've always been willing to adapt to those changes. We've seen them as opportunities for growth, and that's one of the reasons why we succeed. We see obstacles as opportunities.”